Options for paying of Hospitalization Bills

Options for paying of Hospitalization Bills:

If anyone has to get hospitalized for the treatment, when the amount involved is small then it does not matter but when the amount of hospitalization exceeds Rs. 3 Lakhs then payment of hospitalization becomes a challenge

Let us look at the options which are available:

1.     Out of the savings

2.     Borrowing funds from relatives/friends

3.     Credit card

4.     Loan from Bank for hospitalization.

5.     Health Insurance

Let us look at these options in details:

1.     Out of the savings:

Paying hospitalization bills using personal funds, such as savings accounts, fixed deposits, selling of shares, or withdrawal from mutual funds, ensures that no interest or debt is incurred. This method provides financial independence and avoids creation of additional liabilities. However, using savings for medical expenses can significantly deplete the funds earmarked for future financial goals like child education, home buying, retirement, or children’s marriage. It will potentially disrupt long-term financial plans of the family for a long time to come.

2.     Borrowing funds from Relative’s/ Friends

Taking a loan from relatives or friends to pay hospitalization bills can be a convenient option as it generally comes without interest. However, this arrangement may lead to future obligations, as relatives or friends might expect financial support in return when they need it. Additionally, such loans are usually given for a short duration, requiring quick repayment, say in 2 months’ time.

3.     Credit Card

Credit cards provide quick and easy access to funds, enabling immediate payment of hospital bills without delays. However, failing to make payments on time on due date can result in payment of high/very high interest rates, sometimes it is exceeding 36%. Additionally, missed payments or defaults can negatively impact your credit score (CIBIL), for a long time to come.

4.     Loan from Bank for Hospitalization.

Opting for a personal loan from a bank to cover hospitalization bills can be a viable option, as it typically offers lower interest rates compared to interest to be paid to credit cards. However, eligibility requirements must be met, including maintaining an existing bank account for at least six months, having a stable monthly salary being deposited in the account, and providing income tax return (ITR) records. These criteria may make it challenging for individuals without a formal/stable income history to secure the loan.

In case you are considering this option then follow discipline even if you are getting income in cash then do deposit it in bank and then withdrawal it as and when needed.

In summary taking a loan from a bank has its own requirements:

In order to apply for the loan for paying hospitalization bill there are some conditions you have to follow:

1. You must have an existing savings bank account with the same bank.
2. The Account of the bank should has been operational and active continuously for more than 6 months.
3. You should have the regular monthly salary income record with the bank.

5. Health Insurance

a) Lump sum Payment
b) ECS Payment Options

ECS (Electronic Clearing Service) in health insurance is an automated payment method that allows policyholders to pay their insurance premiums directly from their bank accounts. It is a hassle-free way to ensure timely payments without manual intervention.

In the world health insurance is the most efficient and popular way to cover hospitalization costs. It ensures financial security during medical emergencies. It eliminates the burden of large out-of-pocket expenses and provides comprehensive coverage. However, to avail of these benefits, you must have a valid health insurance policy.  Insurance Companies permit clients to pay the premium on yearly, half-yearly, quarterly, or monthly basis.

Why Health Insurance is the Best Choice over Other Payment Options

When it comes to paying hospitalization bills, relying on savings, borrowing from friends or relatives, using credit cards, or taking a personal loan might seem like viable options, but each one has significant drawbacks. Health insurance, on the other hand, provides the most efficient and stress-free way to handle medical expenses. Here’s why:

1. Financial Protection Without Risk: Unlike using your savings, which depletes funds meant for future goals, health insurance covers major hospitalization expenses, reducing your financial burden. It also provides tax benefits under Section 80D, offering additional savings.

2. Convenience & Peace of Mind: Borrowing from friends or relatives can create financial strain and obligations, while credit cards come with extremely high interest rates. Health insurance, however, provides cashless treatment at network hospitals, allowing you to focus on recovery rather than scrambling for funds in an emergency.

3. No Debt or Eligibility Hurdles: Unlike bank loans, which require credit checks, salary records, and income tax returns, health insurance is easily accessible and doesn’t leave you in debt. Additionally, family plans allow you to cover multiple members under one policy, making it a more cost-effective and hassle-free solution.

4. Long-Term Health Benefits: Many health insurance plans offer free annual check-ups, promoting early disease detection and preventive care. This proactive approach ensures you stay healthy and avoid major medical expenses in the future - something no credit card or loan can provide.

In short, health insurance is a smart financial safety net that prevents you from draining your savings, accumulating debt, or facing unnecessary stress during medical emergencies. It offers financial security, convenience, and long-term health benefits - all of which make it the best choice for managing your hospitalization expenses.